1901.9 -6.78 (-0.36%) Sell

TCS continues its fall as more investors loose confidence

13 min read

TATA CONSULTANCY SERV LT performed worse than the broader market on Tuesday. It returned -0.36% to close at 1901.9. It is currently trading +37% above it's 52 week low of 1386.0 and is down only -15% from it's 52 week high.

[Themes containing TCS]

Buy-and-Hold investors in TCS experienced a maximum drawdown of -10.11% over the last three months. It returned +3.38% during this up trending period. There were no long signals during this period. However, the short signal was not profitable and lost investors -3.38%.


TCS has been underperforming the NIFTY-50 index in recent time, after having outperformed till 1 Oct, 2018. Over the last 3 years and 1 month, TCS outperformed the NIFTY-50 index on 51% days.

During the last three months TCS was mostly profitable and delivered on average +0.07% per day. It's best return during this period (of +4.96%) was on Wednesday, 28 Nov, 2018. While it's worst loss in the same period (of -3.53%) was on Wednesday, 21 Nov, 2018. There was initially a bearish trend during this period which started on 18 Dec, 2018 and went on till 21 Dec, 2018. The trend delivered -5.02% losses to investors. This was followed by a bullish trend that started on 15 Jan, 2019 and ended on 21 Jan, 2019. This bullish trend delivered +5.42% to investors.

On monthly basis, TCS delivered profits in more months over the last year, than losses. TCS delivered profits in more months than NIFTY-50 index. TCS significantly outperformed NIFTY-50 index in Apr 2018, when it returned +21.73% compared to +6.56% returned by NIFTY-50 index during it's best month in the last one year - Jul 2018. TCS had a longer winning streak of profitable months than NIFTY-50 index. It went up in 4 straight months (from Jun 2018 to Sep 2018) during which period it delivered +23.42%. It is interesting to note that both TCS and NIFTY-50 index significantly outperform during months when quarterly/annual results are announced.

Try not to become a man of success. Rather become a man of value.
-- Albert Einstein

TCS is becoming less volatile overall. In comparison, the NIFTY-50 index is seeing a fall in volatility. During the last three months, there was a significant fall in TCS's volatility from 29 Oct, 2018 to 20 Dec, 2018. While there was a significant fall in the NIFTY-50 index's volatility from 31 Oct, 2018 to 5 Dec, 2018.

Advanced/professional short-term investors should note that TCS has significant positive skewness in it's return distribution. This indicates that investors can expect TCS to recover from drawdowns quickly. Which makes TCS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

Investors trading in TCS derivatives at this moment can consider 'Long Strangle' options strategy to receive better risk-adjusted returns.

TCS has more chance of extreme outcomes than the NIFTY-50 index. Therefore, TCS must receive a lower allocation than NIFTY-50 in your portfolio. NIFTY-50 index usually has shorter drawdown period than TCS.

Based on your interest in TCS you may find it interesting to know that BAJFINANCE and TORNTPHARM are both large caps that have shown remarkable performance and deserve to be on every investors' watchlist.

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